A 930 per cent hike in property rates tied to subdivision activity has prompted an alliance of ACT industry groups to demand an inquiry into the territory’s commercial property tax system.
ClubsACT, Australian Hoteliers Association (AHA) ACT, Canberra Business Chamber, and Property Council ACT have jointly written to Chief Minister Andrew Barr and several ministers, calling for a review into how general rates are assessed, how lease variation charges are applied, and the methodologies used for valuations that underpin rate reviews.
“All of our organisations are increasingly assisting our members with issues associated with the matters relating to rates, valuation, and lease variation charges,” the letter stated.
“We are aware of significant increases in rates over time for most commercial properties, but we are particularly concerned about excessive and unjustified increases in rate assessments, particularly when there has been some change such as a subdivision, often coupled with significant lease variation charges.”
The letter highlights the financial pressure these charges are putting on local businesses, especially in an already challenging economic climate. One example cited involves subdivision activity resulting in a nine-fold increase in rates, alongside lease variation charges “in the order of hundreds of thousands of dollars.”
They note that these charges are being levied at a time when “ACT businesses are facing a very difficult trading environment. A staggering 40 per cent of businesses have reported they will generate a loss in the current financial year, and many others are struggling”.
The letter warned that “in this environment, significant rates and charges can be the difference between survival and business failure – especially if they are not known and understood in advance”.
The industry coalition said they want to see greater transparency to decision making, as well as “more effective appeal mechanisms, and other reforms to the processes more broadly, designed to encourage investment and more viable business operations”.